After a foreclosure when can I buy a house? It is possible to buy a house after a foreclosure, but most banks may require you to wait a certain period of time first.
In today’s turbulent real estate market, many people with foreclosures in their background are asking after foreclosure when can I buy a house? To be clear, there is no restriction on buying a home after a foreclosure, just on getting a home loan through a traditional bank after a foreclosure. Most banks these days tend to underwrite to Fannie Mae and FHA guidelines, and both have waiting periods before you’ll be able to qualify for a new mortgage.
After a Foreclosure When Can I Buy a House?
The following is a general rundown of the foreclosure guidelines for Fannie Mae and FHA. Note that these guidelines are subject to change at any time and often have more detailed nuances than what is addressed here. For more specific information about your particular situation, it’s important that you consult with a qualified mortgage professional.
Fannie Mae Foreclosure Waiting Period
Fannie Mae’s waiting period for new Fannie Mae financing is 7 years. It is possible that this period can be reduced, but you will need to be able to document that the foreclosure was caused by extenuating circumstances that were beyond your control.
FHA Foreclosure Waiting Period
FHA is not as strict as Fannie Mae, but you will still need to wait at least three years before you are eligible for an FHA insured home loan. As with Fannie, it is possible this period can be reduced, but you will need to be able to document that the foreclosure was caused by extenuating circumstances that were beyond your control.
It’s important to note that though FHA allows for extenuating circumstances, many banks won’t. What is considered “extenuating” often is very subjective and banks don’t want to risk a difference in opinion with FHA and not be able to get the loan insured.
Note that FHA does not consider divorce an extenuating circumstance.
Work on Rebuilding Your Credit Right Away
If you’ve recently been through a foreclosure, chances are your credit has taken a pretty serious hit. If that’s the case, it’s important that you begin taking steps to rebuild your credit right away. The sooner you work to rebuild your credit, the more easily you’ll be able to qualify for new mortgage financing once the waiting periods are over.
For a few tips on how to rebuild your credit, be sure to check out How to Rebuild Your Credit After a Bankruptcy or Foreclosure.
This is just a very general overview and other guideline nuances can apply. For more detailed information about your particular situation, consult with a qualified mortgage professional.
It’s also important to note that though these are the standard guidelines for Fannie Mae and FHA, lenders that underwrite to Fannie Mae and FHA guidelines might add their own more restrictive guideline overlays.